Mid-cap markets still awaiting significant upturn in IPOs, says Nexia International

Aug. 29, 2010 - PRLog -- Levels of corporate activity on global capital markets are showing signs of recovery but new listings or IPOs have not yet begun to accelerate significantly, according to a report from leading global accounting and consulting network Nexia International.

The report, Where next for global mid-cap markets? examines current sentiment and key issues facing a range of mid-market stock exchanges round the world. Nexia’s market commentators broadly agree that any recovery will largely be led by institutional investors, with international funds flowing to relatively low geared investments. However, a more sustained upturn may require the catalyst of a number of key deals to provide the necessary momentum.

The number of Initial Public Offerings (IPOs) globally remained severely depressed during 2009, with notable regional exceptions – namely Hong Kong, NASDAQ, Euronext and TSX Toronto. Most of the markets showed stronger results for secondary offerings, with 80% of the funds raised across the stock exchanges due to secondary offerings.

“While average market capitalisation is slowly returning to normality, investor confidence remains shaky and corporate fund-raising activities are increasing moderately, at best, and will be slow to return to pre-financial crisis levels, and any recovery will have to be on a global scale to be fully sustainable,” says Henry Tan, Nexia International Asia Pacific Chairman and Nexia TS Singapore Managing Director.

In the absence of a significant turnaround in both investor and consumer confidence and, in some instances, a lack of impetus from infrastructure and other projects by cash-squeezed governments around the world, some of Nexia’s commentators believe a long-term recovery remains in doubt.

The majority of Nexia’s experts believe that a sustained recovery in capital markets activity is only possible with the volume of liquidity and demand provided by institutional investors, with private investors having little say – again with regional variations. This is particularly true in smaller countries, such as Singapore, with proportionally smaller numbers of retail investors, where public listings are heavily dependent on institutions.

Beyond investor sentiment, the majority of Nexia’s experts said that the costs, regulatory and governance requirements of listing are still seen as the primary obstacles to mid-market listings.
Nexia’s capital markets commentators believe it’s a matter of ‘back to basics’ if companies are to attract investors, with essential investment criteria being a proven track record, strong management, scalability and the potential for attractive P/E ratios.

•    Hong Kong assumed the number one position for IPOs in Nexia International’s survey, with a total of 73 IPOs valued at over £20bn. In Singapore the number of IPOs increased by nearly 50% year-on-year, a trend which has accelerated into 2010.

•    With regard to total money raised on the markets in 2009, Australia and Hong Kong came out on top (in the absence of definitive figures from NASDAQ), with around £55bn and £52bn respectively.  

•    Hong Kong secured top spot as the largest market for new listings by fund size in 2009 (HK$243.7 billion), and the exchange is expected to maintain its position, with more than HK$300 billion in IPOs anticipated in 2010.

•    The AIM market of the London Stock Exchange has seen very meagre admissions figures, down from 114 in 2008 to just 36 in 2009 and the value of new issues down from £1.1bn to £740m.

•    The number of IPOs last year in Australia fell by 15%, in India by 40%, and on the Nordic, Frankfurt and Johannesburg exchanges IPOs were virtually non-existent. Unsurprisingly, given the financial turmoil in Dubai, NASDAQ Dubai failed to attract any companies looking to go public.

About Nexia International
Nexia International is a leading global network of independent accounting and consulting firms with 590 offices in over 105 countries, providing a comprehensive portfolio of assurance, tax and business advisory services.

With a substantial presence in the world’s major financial and economic centres, Nexia is strategically positioned to serve the diverse international requirements of our clients ranging from globally listed entities and international subsidiaries, to owner managed businesses and high net worth individuals.

Nexia member firms had combined global fee income of US$2.1bn in 2009 and Nexia was ranked the 10th largest international network by revenue in the latest International Accounting Bulletin World Survey (Dec 2009).

Contact Info

Melinda Ilagan, EASTWEST Public Relations for Nexia TS
Tel: +65 6222 0306
Email: melinda@eastwestpr.com

Henry Tan, Nexia TS Public Accounting Corporation
Tel: +65 6534 5700
Email: henrytan@nexiats.com.sg

Kelly Aw, Nexia TS Public Accounting Corporation
Tel: +65 6534 5700 ext 803
Email: kellyaw@nexiats.com.sg